The Law of the European Union is the unique
legal system which operates alongside the laws of Member States of
the European
Union (EU). EU law has direct effect within the legal systems of
its Member States, and overrides national law in many areas,
especially in areas covered by the Single Market. The EU is
not a federal government; as established by the European Court of
Justice, the Community constitutes "a new legal order" in international
law.[1] It is
sometimes classified as supranational law. Currently there
are around 500 million EU citizens in 27 Member States subject to
EU law, making it one of the most encompassing modern legal systems
in the world.

Like the EU itself, EU law can be divided into three pillars.
The first of these, the European Community pillar, comprises
the majority of law produced by the EU and is where the European Court of Justice has
the most power. The EU can also enact legislation under the second and third
pillars - relating to foreign policy and criminal law
respectively - although the powers of the Court of Justice are much
reduced and direct
effect does not apply.

Similar to federal states, the legal system is used to ensure
political results from the member states, because of the
decentralized nature of the political system. Decisions are taken
at the EU level but, implementation is overwhelmingly done by
member states. By contrast, decision making and implementation
inside member states is usually done by the same actors.[2]

History
and development

Main article: History
of European Union law

The development of law of the European Community has been
largely moulded by the European Court of Justice (ECJ). In the
landmark case of Van Gend en Loos in 1963, the ECJ ruled that the
European Community, through the will of Member States expressed in
the Treaty of Rome, "constitutes a new legal order of international
law for the benefit of which the states have limited their
sovereign rights albeit within limited fields."

The distinction between European Community (EC)
law and European Union law is that based on the
Treaty structure of the European Union. The European Community
constitutes one of the 'three pillars' of the
European Union and concerns the social and economic foundations
of the single market. The second and the third pillars were created
by the Treaty on European Union (the Maastricht Treaty) and involve
Common Security and Defence Policy and Internal Security.
Decision-making under the second and third pillars is not subject
to majority voting at present. The Maastricht Treaty created the
Justice and Home Affairs pillar as the third pillar. Subsequently,
the Treaty of Amsterdam transferred the areas of illegal
immigration, visas, asylum, and judicial co-operation to the
European Community (the first pillar). Now Police and Judicial
Co-operation in Criminal Matters is the third pillar. Justice and
Home Affairs now refers both to the fields that have been
transferred to the EC and the third pillar.

Criminal
law

In 2006, a toxic waste spill off the coast of Côte
d'Ivoire, from a European ship, prompted the Commission to look
into legislation against toxic waste. Environment
CommissionerStavros Dimas stated that "Such highly
toxic waste should never have left the European Union". With
countries such as Spain not even having a crime against shipping
toxic waste Franco Frattini, the Justice, Freedom and Security Commissioner,
proposed with Dimas to create criminal sentences for "ecological
crimes". His right to do this was contested in 2005 at the Court of
Justice resulting in a victory for the Commission. That ruling set
a precedent that the Commission, on a supranational basis, may
legislate in criminal law - something never done before to outlined
in treaties. So far though, the only other use has been the
intellectual property rights directive.[3]
Motions were tabled in the European Parliament against that
legislation on the basis that criminal law should not be an EU
competence, but was rejected at vote.[4]
However in October 2007 the Court of Justice ruled the Commission
could not propose what the criminal sanctions could be, only that
there must be some.[5]

Treaties

The primary legislation, or treaties, are effectively the
constitutional law of the European Union. They are created by
governments from all EU Member States acting by consensus. They lay
down the basic policies of the Union, establish its institutional
structure, legislative procedures, and the powers of the Union. The
Treaties that make up the primary legislation include:

The various annexes and protocols attached to these Treaties are
also considered a source of primary legislation. The heads of State
and government of the member
states of European Union signed a constitution
in 2004, but since its defeat in referendums in France and the
Netherlands it was decided to reform the institutions with the
Treaty of Lisbon instead, which has now been ratified by all 27 EU
member states. The constitutional framework of the European Union
is thereby primarily formed by consolidated versions of the Treaty
on European Union and the Treaty on the Functioning of the European
Union.

The classification of legislative acts varies among the First,
Second and Third Pillars. In the case of the first pillar:
Secondary legislation is classified based on to whom it is
directed, and how it is to be implemented. Regulations and
directives bind everyone, while decisions only affect the parties
to whom they are addressed (which can be individuals, corporations,
or member states). Regulations have direct effect, i.e. they are
binding in and of themselves as part of national law, while
directives require implementation by national legislation to be
effective. However, states that fail or refuse to implement
directives as part of national law can be fined by the European
Court of Justice.

Court of Justice of the
European Union

The European Court of Justice (ECJ), has jurisdiction in various
specific matters, conferred on it by the Treaties. In particular
Article 220 EC charges the ECJ (and the Court of First Instance)
with ensuring that the law is observed "in the interpretation and
application of this Treaty",[8] and
this provision has been used by the Court to extend its powers
beyond those otherwise expressly granted.[9] Since
the Maastricht Treaty, the Court has been empowered to impose
pecuniary penalties on Member States who disobey.[10] The
Court has been instrumental in shaping law in the EU, and its
approach is generally described as purposive or teleological[11
] The jurisprudence of the Court, together with
that of the courts of the member states, has established and
defined a number of principles of European Union law, which bind EU
institutions and member states, including direct effect, the
supremacy of European Union law over that of Member states, and
state liability for damages.[11
]

According to the Treaty, the Court comprises one judge per
member state; as of 2007 it has 27 judges. The judges are appointed
"by common accord of the Governments of the Member states".[12] The
judges are appointed for a (renewable) period of six years.[13] The
Court is assisted by eight Advocates
General.[14] The
Court usually sits in Chambers of three or five, but in some cases
as a single judge, in especially important cases as a Grand Chamber
of thirteen judges or as a full court.[15][16]

The Court of First
Instance (CFI) was established on the basis of the Single
European Act in 1988 and was originally "attached to" the ECJ in a
subsidiary role. Following the Treaty of Nice it was given greater
independence and its own jurisdiction.[17
] The jurisdiction of the CFI includes direct
actions by natural or legal persons against Community institutions
for their acts (or failure to act), actions by Member states
against the Commission, and actions relating to Community trade
marks. [18]

According to the Treaty, the court comprises at least one judge
per member state; as of 2007 it has 27 judges. The judges are
appointed for a (renewable) period of six years. [18]
Like the ECJ, the CFI usually sits in Chambers of three or five,
but in some cases as a single judge, as a Grand Chamber of thirteen
judges, or as a full court.[18]
Decisions of the CTI can be appealed to the ECJ on matters of
law.[17
] To reduce the workload of the ECJ and the CFI,
the Treaty of Nice (Article 225a) introduced "judicial panels" to
be used in some areas, with appeal to the CFI. [19]

EU legal
principles

Supremacy

It has been ruled many times by the European Court of Justice
that EC(European Community-first pillar) law is superior to
national laws. Where a conflict arises between EC law and the law
of a Member State, EC law takes precedence, so that the law of a
Member State must be disapplied. This doctrine, known as the
supremacy of EC law, emerged from the European Court of Justice in
Costa v
ENEL.[20] Mr
Costa was an Italian citizen opposed to nationalising the Italian
energy company ENEL, because he had shares in it. He refused to pay
his electricity bill in protest, and argued that nationalisation
infringed EC law on the State distorting the market.[21] The
Italian government believed that this was not even an issue that
could be complained about by a private individual, since
it was a national law decision to make. The Court ruled in favour
of the government, because the relevant Treaty rule on an
undistorted market was one on which the Commission alone could
challenge the Italian government. As an individual, Mr Costa had no
standing to challenge the decision, because that Treaty provision
had no direct effect.[22] But
on the logically prior issue of Mr Costa's ability to raise a point
of EC law against a national government in legal proceeding before
the courts in that Member State the ECJ disagreed with the Italian
government. It ruled that EC law would not be effective if Mr Costa
could not challenge national law on the basis of its alleged
incompatibility with EC law.

It follows from all these observations that the law stemming
from the treaty, an independent source of law, could not, because
of its special and original nature, be overridden by domestic legal
provisions, however framed, without being deprived of its character
as community law and without the legal basis of the community
itself being called into question.[23]

However, while Community law is accepted as taking precedence to
the law of Member States, not all Member States share the analysis
used by the European institutions about why EC law overrides
national law, when a conflict appears.[24]

Many countries' highest courts have stated that Community law
takes precedence provided that it continues to respect fundamental
constitutional principles of the Member State, the ultimate judge
of which will be the Member State (more exactly, the court of that
Member State), rather than the European Union institutions
themselves[25] This
reflects the idea that Member States remain the "Master of the
Treaties", and the basis for EC law's effect. In other cases,
countries write the precedence of Community law into their
constitutions. For example, the Constitution of Ireland
contains a clause that, '"No provision of this Constitution
invalidates laws enacted, acts done or measures adopted by the
State which are necessitated by the obligations of membership of
the European Union or of the Communities..."

However, the difference of positions remained of solely academic
importance. As of now, no court of any Member State has ever
challenged the validity of any legal act of the European Union by
any other means than referring the question to the European Court
of Justice. The German legislature even accepted the judgment of
the European Court of Justice in the case of Tanja Kreil, which rendered void a
provision in the German constitution barring women from voluntary
service in the armed forces, subsequently amended the constitution
and accepted women for any position in the forces.

Direct
effect

EU law covers a broad range which is comparable to that of the
legal systems of the Member States themselves.[26] Both
the provisions of the Treaties, and EU regulations are said to have
"direct effect"
horizontally. This means private citizens can rely on the rights
granted to them (and the duties created for them) against one
another. For instance, an air hostess could sue her airline
employer for sexual discrimination.[27] The
other main legal instrument of the EU, "directives", have direct
effect, but only "vertically". Private citizens may not sue one
another on the basis of an EU directive, since these are addressed
to the Member States. Directives allow some choice for Member
States in the way they translate (or 'transpose') a directive into
national law - usually this is done by passing one or more
legislative acts, such as an Act of Parliament or statutory instrument in the UK. Once this has
happened citizens may rely on the law that has been implemented.
They may only sue the government "vertically" for failing to
implement a directive correctly. An example of a directive is the
Product
liability Directive,[28] which
makes companies liable for dangerous and defective products that
harm consumers.

Fundamental
rights

Four
freedoms

The core of European Union economic and social policy is summed
up under the idea of the four freedoms - free movement of goods,
workers, capital and the freedom of establishment to provide
services.

Movement of
goods

Under the first title of the Treaty of the European Communities
one finds the provisions dealing with the free movement of goods.
In the years between the two world wars, and leading into the Great
Depression, governments around the world had employed vigorous
policies of national protectionism. The erection of tariffs and customs duties on
imports and sometimes the export of goods was widely seen as
contributing to a fall in trade and hence the stalling of economic
growth and development. Economists had long said, since Adam Smith and David Ricardo that
the Wealth of Nations could only be
strengthened by the long term lowering and abolition of barriers
and costs to international trade. The abolition of all such
barriers is the function of the treaty provisions. According to
Article 28 EC,

"28. Quantitative restrictions on imports and all measures
having equivalent effect shall be prohibited between Member
States."

Article 29 EC states the same for exports. The first thing to
note is that the prohibition is simply between member states of the
European Community. One of the institutions' primary duties is the
management of trade policy to third parties - other countries such
as the United States, or China. For instance, the controversial Common Agricultural Policy
is regulated under Title II EC, Article 34(1) authorising
"compulsory coordination of national market organisations" with
common European organisation. The second thing to note is that
Article 30 sets out the exceptions to the prohibition on free
movement of goods.

"30. The provisions of Articles 28 and 29 shall not preclude
prohibitions or restrictions on imports, exports or goods in
transit justified on grounds of public morality, public policy or
public security; the protection of health and life of humans,
animals or plants; the protection of national treasures possessing
artistic, historic or archaeological value; or the protection of
industrial and commercial property. Such prohibitions or
restrictions shall not, however, constitute a means of arbitrary
discrimination or a disguised restriction on trade between Member
States."

So governments of member states may still justify certain trade
barriers when public morality, policy, security, health, culture or
industrial and commercial property might be threatened by complete
abolition. One recent example of this was that during the mad cow disease crisis in the United
Kingdom, France erected a barrier to imports of British beef.[29]

Movement of
workers

Movement of
capital

Freedom
of establishment

Social
chapter

The Social chapter in the European Union refers to parts of the
treaty which deal with the equal treatment of men and women under
Article 141 EC and the regulation of working time under the Working Time Directive. One
recent piece of anti-discrimination legislation is Directive
2006/54/EC "on the implementation of the principle of equal
opportunities and equal treatment of men and women in matters of
employment and occupation".

The UK secured an opt-out from the Social Chapter as many
members of John
Major’s government were fundamentally opposed to extension of
the EU’s competence into social areas. The issue was so divisive
that it threatened to split the Cabinet. The Labour Party abolished
this opt-out immediately after coming to power in the 1997 general
election.[30]

Competition
law

The economist's depiction of deadweight loss to efficiency that
monopolies cause

Since the goal of the Treaty of Rome was
to create a common market, and the Single European Act to create an
internal market, it was crucial to ensure that the efforts of
government could not be distorted by corporations abusing their market power. Hence
under the treaties are provisions to ensure that free competition
prevails, rather than cartels and monopolies sharing out markets
and fixing prices. Competition law in the European Union
is largely similar and inspired by United States antitrust.

Collusion
and cartels

"all agreements between undertakings, decisions by associations
of undertakings and concerted practices which may affect trade
between member states and which have as their object or effect the
prevention, restriction or distortion of competition within the
common market."

Agreements, decisions and concerted practices, known
collectively as "collusion" are deemed automatically void under
Article 81 (2). Article 81 (3), however, makes exceptions for
collusion that could be of economic benefit.

"The provisions of paragraph 1 may, however, be declared
inapplicable in the case of (i) any agreement or category of
agreements between undertakings; (ii) any decision or category of
decisions by associations of undertakings; (iii) any concerted
practice or category of concerted practices, which contributes to
improving the production or distribution of goods or to promoting
technical or economic progress, while allowing consumers a fair
share of the resulting benefit, and which does not (a) impose on
the undertakings concerned restrictions which are not indispensable
to the attainment of these objectives; (b) afford such undertakings
the possibility of eliminating competition in respect of a
substantial part of the products in question.

The term "undertaking" essentially refers to businesses, but
also any economic entity which carries on a trade.

Dominance
and monopoly

Article 82 TEC is designed to prohibit abuse by very large
corporations who dominate the market.

"Any abuse by one or more undertakings of a dominant position
within the common market or in a substantial part of it shall be
prohibited as incompatible with the common market insofar as it may
affect trade between Member States.

This provision is then clarified through the use of some
specific categories of behaviour which are deemed "abusive".

"Such abuse may, in particular, consist in (a) directly or
indirectly imposing unfair purchase or selling prices or other
unfair trading conditions; (b) limiting production, markets or
technical development to the prejudice of consumers; (c) applying
dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage; (d)
making the conclusion of contracts subject to acceptance by the
other parties of supplementary obligations which, by their nature
or according to commercial usage, have no connection with the
subject of such contracts.

Mergers
and acquisitions

Under the authority of Article 82 TEC, the European Commission
became able not only to regulate the behaviour of large firms it
claims abuse their dominant positions or market power, but also the possibility of
firms gaining the position within the market structure that enables them to
behave abusively in the first place. Regulation 139/2004 deals with
mergers that have a "Community dimension" and lays out a procedure
whereby all "concentrations" (i.e. mergers, acquisitions,
takeovers) between undertakings are subject to approval by the
European Commission.

Public
sector regulation

Public sector industries, or industries which are by their
nature providing a public service, are involved in competition law
in many ways similar to private companies. Under EC law, Articles
86 and 87 create exceptions for the assured achievement of public
sector service provision. Many industries, such as railways,
telecommunications, electricity, gas, water and media have their
own independent sector regulators. These government agencies are
charged with ensuring that private providers carry out certain
public service duties in line of social welfare
goals.

^
"But this obligation does not give individuals the right to allege,
within the framework of community law... either failure by the
state concerned to fulfil any of its obligations or breach of duty
on the part of the commission."